Neelie Kroes responds to taxi protests in Europe

http://ec.europa.eu/commission_2010-2014/kroes/en/blog/my-view-todays-taxi-protests-and-what-it-means-sharing-economy

by Eduard • 12 years ago

67 33 12 years ago

ec.europa.eu

norswap• 12 years ago

It's nuanced, not peddling to any one camp and shows deep understanding of the issues at hand. I wish more politicians were like Neelie Kroes.

tormeh• 12 years ago

She's my favorite politician.

fidotron3• 12 years ago

This is really quite a remarkable response, and in my view entirely correct.

"More generally, the job of the law is not to lie to you and tell you that everything will always be comfortable or that tomorrow will be the same as today."

That's possibly the single biggest unstated divide in modern western society, where a significant proportion of the population do think they can legislate complete stability for themselves into existence, and that's one of the first times I've ever seen it so bluntly shot down. A lot of people just want the quiet easy life, and get ferociously angry when they perceive someone else as rocking their boat.

antihero2• 12 years ago

But then, contrast this with the Uber CEO's trying to get rich by essentially destroying the livelihoods of a huge amount of people. Ethics does play a part in this, and obviously what he says is true, but it's only true because there are so many greedy people out there that put their own desires over others' needs.

Disrupting markets may be sexy, but you always have to think of the consequences.

I was discussing the idea with a friend about buying a company in order to grab their customer base, which he thought was a fantastic idea until I pointed out that it utterly fucks over the employees of that company. Sure, if his company was good enough, he'd win eventually, but you can coexist and do things in a way that aren't utterly vicious and unethical.

There's a middle way, which is allowing evolution but in an ethical, considerate manner.

fidotron3• 12 years ago

But as she mentions, just wait for driverless cars. Or should they be pre-emptively banned as they'll destroy the livelihoods of millions?

This isn't Uber's CEO being evil, it's simply that they found new efficiencies to squeeze out enabled with newer technology.

namesbc• 12 years ago

Or rather think about all of the new drivers enabled by Lyft, Uber, etc. These new drivers now have a livelihood that wasn't possible under the medallion taxi cartel.

jiggy2011• 12 years ago

Once you have their consumer base, you can hire their employees.

OneOneOneOne• 12 years ago

I think most respondents are missing your point. At heart this is not about Uber or disrupting technologies.

ddalex• 12 years ago

I think it is missing the point - the protests are not against digital innovation, as much as Uber would like to point so. There are countless taxi applications out there that will allow you to get a taxi at the press of a button - nobody is having a beef with that.

Uber and the other apps provide the same service - you get a car to transport you from A to B and you pay for the service proportional with the distance and time you sit in that car.

The essential difference between Uber and the other apps is that Uber uses unlicensed drivers, while the other apps use licensed drivers. This creates a big handicap for the regulated taxis. Uber skirts around the law to avoid regulation, and the difference in cost of operation enables them to "win".

The playing field is simply not fair and not equal to all players. Either we start regulating Uber drivers as equal to other taxi service providers, requiring expensive licences, or we eliminate regulation for all drivers.

Let's not make a technological poster child out of Uber's skirting of laws.

splintercell3• 12 years ago

Either we start regulating Uber drivers as equal to other taxi service providers, requiring expensive licences, or we eliminate regulation for all drivers.

So why aren't the Tax drivers protesting against the regulation? Their decision to protest tells you where they see more benefit.

You may keep on saying that this is not about their stance against digital innovation, but the fact is that its all about economics.

Taxi cabs in most major cities run on a Medallion system, its an artificial limit on the number of cabs that can exist in the city(sometimes done because of lobbying by the existing cab owners, sometimes to reduce the number of cabs in the city). This restriction causes the price of Medallion to be artificially higher than it should be. For instance in NYC, Medallions are now sold for upto $1 million. http://www.nytimes.com/2013/11/15/nyregion/1-million-medalli...

Why do people pay $1 million to own a cab? Because this is the aggregated value they estimate to be, based on the number of years they will operate the cab for(and the profit they will make from it). This is precisely why most cab owners in the NYC are immigrants who can barely speak English, because only they have the savings to own and operate a cab.

Imagine you having spent $1 million to acquire a cab medallion, would you support any measure to increase the number of cabs in the city? Nope! That's precisely why all measures against increasing this number is heavily resisted by the cab owners. The value of their capital asset goes down if the number of cabs goes up in the city. You'd think that they would be ok with bringing Uber under the same medallion system but that position would be completely contradictory to their economic interest. They have, in past resisted increase in number of medallions, so that makes no sense for them to even remotely support bringing Uber under the same licensing system.

This is also the reason why the slave owners of the south resisted abolition of slavery. A slave stops being a 'labor' input in your profit and loss calculation, and becomes a capital asset. Its value is derived from the total earnings anticipated to be made in the lifetime of the slave. Consider it like this, if you are a programmer who can make $100K a year, and has a working life of 20 years, then a slave owner would be willing to pay you upto $100K*20 = $20M to posses you, of course he wouldn't wanna pay $20M, because then he would make no profit, plus there is a risk potential involved, running away or death, so like $10M. Now if a slave owner pays $10M to acquire you then there is no way he would wanna set you free until he at least recuperates that cost.

king_jester2• 12 years ago

Taxi cabs in most major cities run on a Medallion system, its an artificial limit on the number of cabs that can exist in the city(sometimes done because of lobbying by the existing cab owners, sometimes to reduce the number of cabs in the city). This restriction causes the price of Medallion to be artificially higher than it should be. For instance in NYC, Medallions are now sold for upto $1 million. http://www.nytimes.com/2013/11/15/nyregion/1-million-medalli....

The medallion program in NYC was recently expanded with the introduction of green cabs that are official NYC cabs that service outer boroughs. The Bloomberg administration fought a court battle over the medallion expansion and won. Medallion systems are not inherently bad, but they can be used as a way to stifle better service (just like anything).

Why do people pay $1 million to own a cab? Because this is the aggregated value they estimate to be, based on the number of years they will operate the cab for(and the profit they will make from it). This is precisely why most cab owners in the NYC are immigrants who can barely speak English, because only they have the savings to own and operate a cab.

Prior to the medallion expansion, most medallions were actually owned by firms and not individual cabbies. The reason why most cabbies are immigrants is not because they are loaded and can buy a million dollars of value outright. Also, most cabbies do speak English to some capacity.

Imagine you having spent $1 million to acquire a cab medallion, would you support any measure to increase the number of cabs in the city? Nope! That's precisely why all measures against increasing this number is heavily resisted by the cab owners.

This is true, firms worried about value loss of their medallions when more would be issued. However, it is important that cab MEDALLION HOLDERS, not cabbies, were most opposed to the change as they had the most to lose. In NYC, cabbies were also opposed, but mostly because they worried the terms of their medallion access would get worse and leave them poorer.

You'd think that they would be ok with bringing Uber under the same medallion system but that position would be completely contradictory to their economic interest. They have, in past resisted increase in number of medallions, so that makes no sense for them to even remotely support bringing Uber under the same licensing system.

In the case of NYC, Uber would most certainly want to avoid being a part of the medallion system as that would effectively regulate their business and drivers. Uber seeks to avoid regulation while providing private cab service, not to be integrated into regulated cab systems.

This is also the reason why the slave owners of the south resisted abolition of slavery. A slave stops being a 'labor' input in your profit and loss calculation, and becomes a capital asset. Its value is derived from the total earnings anticipated to be made in the lifetime of the slave. Consider it like this, if you are a programmer who can make $100K a year, and has a working life of 20 years, then a slave owner would be willing to pay you upto $100K*20 = $20M to posses you, of course he wouldn't wanna pay $20M, because then he would make no profit, plus there is a risk potential involved, running away or death, so like $10M. Now if a slave owner pays $10M to acquire you then there is no way he would wanna set you free until he at least recuperates that cost.

Please don't reduce people who were slaves to value objects, this is extremely problematic and dehumanizing.

ddalex_ro• 12 years ago

Regulation has its purpose - all public utilities are regulated. Taxi is a public utility, and as such the society prefers protect the profits of the cabbies in exchange for regulated safety standards, maximal prices, e.g. for the airport rides, and special protection for the customers. Otherwise, the competition (a taxi driver business has a very low entry barrier, you just need a car) will drive down the prices and the quality of the service.

A fit analogy - replace "Uber" in your retoric with "low cost airline", and see how happy would you be to fly an airline unregulated by FAA.

The same crowd here, that roots for Uber, screams for net neutrality and want to have the ISPs regulated as common carriers. The cognitive dissonance astounds me.

ahomescu12• 12 years ago

Why do people pay $1 million to own a cab? Because this is the aggregated value they estimate to be, based on the number of years they will operate the cab for(and the profit they will make from it). This is precisely why most cab owners in the NYC are immigrants who can barely speak English, because only they have the savings to own and operate a cab.

I find it extremely hard to believe that an immigrant with $1 million in savings (which practically makes someone rich in most parts of the world) would move to NYC and then decide to become a cab driver.

seertaak• 12 years ago

Exactly -- the problem is regulatory arbitrage. Mrs. Kross, like so many other clueless pols, is so dazzled by the money and intelligence of these firms that she has lost her ability to think critically about what they are doing.

justincormack• 12 years ago

No, in London the Uber drivers are licensed. You are not allowed to run a service with unlicensed drivers.

The problem is that taxis were given a monopoly on metering by time and distance (largely, minicabs are supposed to pre quote, not sure how Uber gets around this), and a monopoly on street hailing. Smartphones make stret hailing much less advantagous.

pcrh• 12 years ago

I agree with your comment about laws (the same criticism applies to AirBnB, incidentally). A well run society does not, or shouldn't, simply allow companies to pick and choose which laws they will follow.

As to the remarks in the article about entrepreneurialism, taxi drivers are mostly pretty entrepreneurial. The medallion system that run in US cities and some others keeps drivers from operating as freely as they might, so drivers usually need to work for a medallion holder, and it is the medallion holders who are reaping economic rents, not the drivers. And it is precisely these economic rents that Uber hopes to capture; it is not aimed at benefiting the public or the drivers.

Contrary to the medallion system, London has no restriction on the number of taxis allowed to operate. In London, many "black cab" drivers are freelance and own their own vehicle, etc. Very entrepreneurial. They get fares by being the only ones allowed to pick passengers up on the street, and so-called "taxi ranks" but can also use the usual phones, etc. They can also use traffic lanes that are normally restricted to buses, which are less congested. In exchange for these privileges, they have to drive vehicles that are wheelchair accessible, have higher requirements of safety than ordinary passenger vehicles, and must pass more stringent road worthiness tests than required of non-black cabs and private vehicles. They are also restricted in what they can charge, as shown on their meter.

The cars using Uber have none of these restrictions and with the advent of the app, being allowed to collect passengers from the street is no longer such an advantage for black cab drivers, depriving them of fares and income, while proving a lower quality service to passengers on average.

In the end, I imagine that Uber will have to accede to local regulations, at which point their ability to make money becomes more similar to what exists currently, i.e. not such a big deal after all.

andor• 12 years ago

I think it is missing the point - the protests are not against digital innovation, as much as Uber would like to point so.

Not about innovation per se, but about recognizing that even with all that internet stuff added, Uber basically still runs a taxi service, just like listening to an audio broadcast over the internet is still radio. Uber is not about "sharing rides", it's a regular business.

The essential difference between Uber and the other apps is that Uber uses unlicensed drivers, while the other apps use licensed drivers.

Taxi companies in Germany need two kinds of licenses:

* Each driver must have a drivers license that allows commercial transportation of passengers. The regular drivers license doesn't cover transporting people for profit. If you do it anyways, you're essentially driving without a license, which voids your car insurance. Apparently, passengers don't even have to pay unlicensed drivers, because the license is required for transportation contracts to be valid. According to Wikipedia, the commercial license costs about EUR 400 for 5 years and requires a medical checkup, clean driving and criminal records, and you have to prove your knowledge of the place you're going to drive at. "Uber Black" drivers have such a commercial license. "Uber Pop" drivers don't, they just need a clean criminal record. So they are probably not insured if they drive for profit.

* Each taxi company needs a concession that grants the right to run a taxi service, but also requires the company to fulfill its public role: operate the service day and night, don't decline any passengers (e.g. in order to wait for more profitable destinations), and take the official rate. Yes, prices are regulated, probably to protect both passengers and drivers. To get a concession, you have to prove that you are able to run a taxi / rental car company according to the law, and pay a small fee for each of your cars. It's not expensive, but the number of concessions in each city is limited, which is why there's a "black market" in some places. You can't sell concessions, but you can offer willing drivers a shortcut around the waiting list by selling them shares of your company [1].

Uber doesn't have a concession, they want to be a bit more flexible with regards to privileges and rights. Real markets are inefficient, and "disrupting" them can also mean that customers might be worse off in the future. For instance, when no real taxis are left, and Uber decides that its service should be more expensive in bad weather... [2] Or when Uber doesn't want to pick you up because of your bad rating, but there is no other way for you to get home.

[1] http://www.derwesten.de/politik/so-funktioniert-der-betrug-i...

[2] http://www.theverge.com/2013/12/18/5221428/uber-surge-pricin...

Neelie Kroes responds to taxi protests in Europe

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